New issues from NBAD, KWG; Asian names soften; Halkbank markets notes; IDB advances deal

By Christine Van Dusen

Atlanta, March 27 – National Bank of Abu Dhabi and China’s KWG Property Holding did deals while Turkey’s Turkiye Halk Bankasi AS (Halkbank) marketed notes on a Monday that saw emerging markets assets remain mostly resilient, even as investors leaned toward safer havens.

“With the American Health Care Act off the table for now, a big question mark looms over the promised tax reforms which the new U.S. Administration has vowed to tackle next,” a London-based analyst said. “While the increased uncertainty favors safe-haven assets in general, it’s a mixed blessing for EM credit.”

On the one hand, the softer environment “weighs on EM and higher uncertainty points to volatility ahead,” he said. “On the other hand, further unwinding of the reflation trade and a more moderate Trump agenda contained by checks and balances should certainly boost the outlook for EM.”

Meanwhile, oil prices continued to slip “despite pledges by several oil producers to back an extension of the agreed output cuts,” he said.

In trading, Asian bonds were a little bit softer on Monday morning along with equities and oil prices, a trader said.

“But certainly no panic, with spreads from 1 basis point to 2 bps wider only,” he said. “The Street has been happy to sell some high-beta names down ... but for the most part we’ve seen buyers come back on all prints. Clients have been mostly sidelined, although PB has been a net seller on the platform into the higher cash prices.”

Volumes were low, with Chinese bank bonds moving 1 bp wider and senior notes from Korean banks mostly unchanged, another trader said.

Asian high-yield moves higher

High-yield sovereign bonds from Asia moved higher with U.S. Treasuries, but the morning did not see much interest from buyers, another trader said.

“Philippines’ curve was ¼ point to ½ point higher,” he said. “Indonesia’s curve was ¼ point higher.”

As the session went on, Asian bonds experienced Street-driven selling in high-beta names, but “clients were also selective sellers, resulting in a generally weak day, with spreads closing 2 bps to 4 bps wider,” another trader said.

Asian corporates underperform

Chinese corporates and some Indian corporates were among the day’s underperformers, the trader said.

The tone, overall, was “defensive, but cash is holding in to close only 1 bp to 2 bps wider,” another trader said. “Volumes were low with some outright sellers taking profit after the rate move.”

High-yield sovereigns were higher at the end of the Asian session, he said.

Saudi Arabia trades

From the Middle East, the three-tranche issue of notes due in 2021, 2026 and 2046 from Saudi Arabia saw some activity on Monday.

The 2 3/8% notes due in 2021 that priced at 99.007 to yield 2.588%, or Treasuries plus 135 bps, were seen at 98.18 bid, 98.43 offered after Friday’s 97.81 bid, 98.06 offered and Thursday’s 97.87 bid, 98.12 offered.

The 3¼% notes due in 2026 that priced at 98.679 to yield 3.407%, or Treasuries plus 165 bps, moved to 97.25 bid, 97.37 offered after Friday’s 96.93 bid, 96.98 offered and Thursday’s 96.80 bid, 96.95 offered.

And the 4½% notes due in 2046 that priced at 98.015 to yield 4.623%, or Treasuries plus 210 bps, were seen Monday at 98.38 bid, 98.63 offered after Friday’s 98.05 bid, 98.15 offered and Thursday’s 98 bid, 98.15 offered.

Citigroup, HSBC, JPMorgan, Bank of China, BNP Paribas, Deutsche Bank, Goldman Sachs, MUFG Securities, Morgan Stanley and NCB Capital were the bookrunners for the Rule 144A and Regulation S deal.

NBAD sells green bonds

In its new deal, National Bank of Abu Dhabi priced $587 million notes due March 30, 2022 at a spread of mid-swaps plus 98 bps, a market source said.

The notes were talked at a spread in the 100-bps area.

BofA Merrill Lynch, Citigroup, Credit Agricole CIB, HSBC, MUFG Securities and National Bank of Abu Dhabi were the bookrunners for the Regulation S deal.

Other details were not immediately available on Monday.

The proceeds will be used to finance green projects.

KWG prints add-on

China’s KWG Property priced an additional $100 million of it 6% notes due Sept. 15, 2022 at par to yield 6%, according to a company filing.

The notes will be consolidated with the existing $400 million 6% notes due 2022 that were issued on March 15 at par.

The proceeds will be used to refinance debt.

KWG Property is a developer based in Guangzhou, China.

Halkbank on roadshow

Turkey’s Halkbank is on a roadshow for a dollar-denominated issue of benchmark-sized notes due in 10 years, a market source said.

BofA Merrill Lynch is leading the deal.

Other details were not immediately available on Monday.

Halkbank is a state-owned lender based in Ankara, Turkey.

IDB sets size

In other deal-related news, Islamic Development Bank set the size at $1 billion to $1.5 billion for its upcoming issue of Islamic bonds, a market source said.

Emirates NBD, Goldman Sachs, Gulf International Bank and Standard Chartered Bank are the bookrunners for the Regulation S deal.

The issuer is a Jeddah, Saudi Arabia-based lender.

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